Elgi Equipments, now the sixth-largest air-compressor manufacturer globally, is aiming to be among the top three makers with a turnover of over $400 million, in the next five years.
The Coimbatore-based firm is also in the process of reshaping its business operations to have the earnings before interest, taxes, depreciation, and amortisation (EBITDA) of 16 per cent from the current 10-11 per cent and increase Return on Capital Employed (ROCE) to 30 per cent from the current 20 per cent, Jairam Varadaraj, managing director, Elgi Equipments, told Business Today.
"We have the full range of products and is now present in all the global growth markets. Efforts will be to increase market share and consolidate. These growth plans have not factored any possible inorganic growth opportunities," he said.
Globally, the air compressor industry is growing at 2-3 per cent, whereas Elgi has been growing at 10-15 per cent. The Indian industry is estimated to be about $700 million, mainly dominated by four major companies. The domestic market is growing at 10-12 per cent a year. Several unorganised companies import components from China and they constitute about 10 per cent of the market.
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The global air compressor market size is expected to reach $40.43 billion by 2025 registering a CAGR of 3.8 per cent from 2019 to 2025, according to a study by Grand View Research. Air compressors have wide applications in various industries, such as manufacturing, semiconductors & electronics, home appliances, healthcare, oil & gas, food & beverages, and energy.
Elgi Equipment had consolidated revenues of Rs 1,924 crore in 2020-21 as against Rs 1,829 crore in 2019-20 and a standalone net profit of Rs 105.09 crore as compared to Rs 100.42 crore in 2019-20. Globally, markets had recovered well after the first wave of coronavirus pandemic and international revenues were more than half the revenues. During the second wave of the pandemic in India, air compressors for medical oxygen equipment demand increased and Elgi had to triple production for such compressors.
Elgi sells its compressors in over 120 countries with a direct presence in 26 countries. Major international markets are the US, Europe, Australia and countries like Thailand and Indonesia in South East Asia, he said.
Varadaraj said current research and development efforts are focused on developing better environment-friendly products like oil-free compressors and more efficient products.
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